Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Minutes of Evidence

Examination of Witness(Questions 440-459)

THE RT
HON LORD
ROOKER

WEDNESDAY 30 OCTOBER 2002

440. Have you any idea at the moment what percentage
is likely to be given to bringing existing homes up to standard,
building new homes and regenerating failing areas?
(Lord Rooker) No. At this point in time the answer
is no, simply because we are still working on how we "divi"
up the money. John has made it absolutely clear in the statement
that he made on 18 July to the House of Commons that he is looking
for a step change in output. We do not mean fiddling marginal
figures; we are looking for a step change in housing production
in this country, which by and large has fallen behind what we
need to produce by a very long margin indeed. We need to get the
best value for the money that we receive from the Treasury, using
all innovative schemes that we can, such as issues related to
the Challenge Fund that you have heard about this morning.

441. You were obviously listening to the answers
that Bill O'Brien had about the worry that some of us have who
represent seats in the North about the majority of housing monies
being diverted down to London and the South East. I do not want
to put words into Bill's mouth, but he was speaking from the perspective
of a Member who has a problem with abandonment in his constituency.
Does the department recognise that other northern cities, like
Chester and York, face exactly the same problem as London and
the South East, for example, that house prices have rocketed and
key workers and first-time buyers cannot afford to buy in those
cities? How flexible will the allocation of the new money be?
(Lord Rooker) Let me make this point absolutely clear.
I understand the thrust of what Bill was saying. Firstly, in the
year 2003-04, which we have already announced for the development
programme of the Housing Corporation, every region will receive
more. That is after we have top-sliced the £2 million for
the Challenge Fund. Everybody will get more that year than the
previous year. Norman Perry gave you the reasons for the £15
millionit looked like a cashflow situationbut it
did not deprive anybody of anything. So every region will receive
more. We are concerned that because the biggest amount of pressure
is on London and the wider South Eastby the "wider
South East" I mean going beyond what we normally mean by
that term to include as far north as Northampton and the Milton
Keynes areaand because the numbers are bigger, the prices
are bigger and it is what most people talk about. That does not
mean to say that the department and Ministers are not concerned
with national responsibilities and the abandonment in the North.
Of course, there are hot spots in the North where it is very difficult
for first-time buyers to get into the market. So we have some
major problems of national importance. Unfortunately, this is
an unequal country in terms of our economic regions. Nevertheless
because of the pressures and the numbers being bigger in the South
East, people may tend to think that we are ignoring the North
and the Midlands, but far from it. Every region will receive more.
We have to deal with the pathfinder areas in terms of abandonment
and find ways of rebuilding those housing economies that have
collapsed. Recently I have stood in streets in some northern towns
that are full of abandoned houses. Literally every house is empty
for three or four streets around; no one knows where the people
have gone; and the houses have been sold in pubs sometimes by
crooked landlords for £1,000 a time. There are some major
problems to deal with. We are not ignoring the problems of the
North and the Midlands. The necessity is because of the pressure
on the South East and the sheer numbers and it tends to be what
the media and Ministers talk about.

442. Having listened to the responses from the
witnesses from the Housing Corporation, are you confident that
the priorities within your department are reflected in the priorities
of the Housing Corporation?
(Lord Rooker) Yes. Particularly for the pathfinder
areas and for growth areas designated in the South East, we are
looking at the way in which the department will organise itself
to manage and to push that forward, including ministerial accountability
for those areas.

Chairman

443. Are you doing it or is the Housing Corporation
doing it?
(Lord Rooker) the Housing Corporation does what we
ask it to do. It is a very good deliverer and we have absolute
confidence in it being able to deliver and to be a lever of change
for the Government or the department. There is no question about
that. They have a good track record of governance in the area
that they look after. There is a huge amount of private money
going into it in the Housing associationssome £24
billion of private sector investment. So it is fundamental that
we have good regulation and that we do not have any problems that
frighten off private investors. This is not just a matter of public
money. There is a big mixture. We have confidence that they will
be able to deliver what we require and when we set targets they
have a track record of delivering on them.

Alistair Burt

444. Earlier you spoke about the step change
in building. In order to accomplish that you have to ensure that
you have enough people with the skills to carry out the job. Earlier
some of the witnesses talked about the problems that we have and
the national shortage of skills in the construction industry.
If you talk to those who teach them and represent them, you find
that everyone is seriously concerned about the situation. Do you
have a view on it? How will we tackle this?
(Lord Rooker) I have a view on some of the background
as to why it has happened.

Chairman

445. I stopped witnesses earlier on the way
in which there has been a destruction of the training boards.
(Lord Rooker) I served for 27 years on the governing
body of what used to be called Upton College and is now called
Birmingham College in Birmingham. Essentially it is a building
FE college. I know what happened when the further education funding
council came along under the aegis of the previous Government.
Virtually all the building courses disappeared, as they did out
of most colleges because it was cheaper to run paper-based courses.
We virtually snuffed out training in the FE sector in that way.
That was a real problem. Notwithstanding that, the industry was
not queuing up to send apprentices and trainees. That is a real
issue. On the other hand, I see headlines in the media saying
that bricklayers can earn £70,000 in Birmingham. So there
is a future; there is money to be earned. It is a peripatetic
industry; but it is less peripatetic if some modern construction
methods are involved. People need to have faith in the future.
If they know that there is confidence, that we want a step change,
that we will fund it, that we will make sure that we get other
funding and not just from the public sector, and that we change
the structure so that there is confidence in the future, people
are likely to invest in land, development, building and training
and people will then invest their futures in it.

Alistair Burt

446. Whatever may have happened in the past,
there is still this sense of feeling down about vocational trade
courses. Do you think that enough is being done to ensure that
people who are in training feel that it is the right kind of career
to go into and that there is enough support and encouragement
for people to do it?
(Lord Rooker) I do not think that there is enough
done. I do not think that there has ever been enough done. You
are talking to a formerly indentured apprentice toolmakertrue,
he has lost his way! For people to go into manufacturing at any
time, whether construction or conventional manufacturing, is difficult.
Not enough people push or extol the benefits or the joys of creating
things and making things, as well as making things happen in terms
of management. We have a problem here.

Mr Clive Betts

447. On fiscal incentives, does that have a
role to play in terms of housing, such as attracting investment
or are we encouraging employers to provide homes for key workers?
(Lord Rooker) Absolutely. I took the advantage of
reading some of the evidence that you have receivedby the
way I recommend that you all do that. I have the advantage in
particular of Surrey County Council and local government associations,
and the benefit of representations from a colleague in the House
from one of the cities in Surrey. I looked at some of their documentation,
and at what they have been doing as employers and facilitators
and not just as an authority, to try to encourage the creation
of affordable housing and to do it in such a way that they do
not run the risk of subsidising the employee, so that the Inland
Revenue comes along and says, "Benefit in kind". It
is worth considering that, subject to your own deliberations.

Chairman

448. At the moment are you losing out to the
Treasury in this area?
(Lord Rooker) No. The department is in constant discussion
with the Treasury about fiscal arrangements. The fact of the matter
is that even the private sector has woken up to the fact in relation
to key workers that they do not want to become landlords, or get
involved in housing, but some companies want to be able to facilitate
housing for their employees. Sometimes they do that through housing
associations and through having nomination rights. In your own
evidence you have examples of where that has happened. There are
opportunities for doing that on a larger scale in the public and
the private sectors.

Mr Clive Betts

449. Should any specific fiscal incentives be
introduced?
(Lord Rooker) There are incentives now. Any employer,
public or private, looking over a three or four-year period at
their recruitment and retention costs can see the money wasted
on that. If they could direct some of that money into some kind
of housing pot or fund, as in examples given when people have
taken a couple of years of pension payments and the employer has
put it into a pot for housing. That is happening without extra
incentives. There is always the possibility that the Treasury
and others can find other ways of generating fiscal incentives.
I think it would be a wrong strategy on my part to speculate on
that.

450. The Government have targets for virtually
everything these days, but I have yet to discover one for the
provision of affordable housing over the next 10 years. Is there
one lurking away in the department?
(Lord Rooker) No, there is not. We said in our note
to you that the definition of affordable housing meant different
things to different people at different times. I notice that the
Committee, when it issued its press notice calling for evidence,
did not say what it meant by affordable housing, which is probably
why we have such a variety of submissions.

Chairman

451. Given that we have not solved the problem,
would you like to solve it now by telling us what it is?
(Lord Rooker) It dependsthis is not a fudgeon
the location in the country and on the type of housing. Say, we
have a mixed geographical situation as regards housing costs,
wage costs and other factors, we are looking for affordable housing
for those who have incomes lower than the averagebut maybe
not the lowestand we are looking at housing that may be
at sub-market rent, low cost home ownership, shared housing, and
a whole range of issues provided from different sources. If you
want to put a figure on it, I suppose we would argue in terms,
for example, of planning applications and looking at some of the
figures in the planning guidance, and generally speaking we would
expect perhaps a quarter of the kind of figures that we would
use to be affordable housing. Then we know what we should be building
on a regional basis according to the planning guidance; we know
what we are building in total, which is somewhat less than the
figures in the planning guidance, and, therefore, it is easy to
work out a theoretical shortfall of affordable housing.

452. What would that shortfall be in fact?
(Lord Rooker) All I can give is the figures from our
published documents. In London we reckon we have delivered 4,000
affordable dwellings and 6,000 in the South East, compared with
what we would have expected in London of 6,000 and 13,000 in the
South East. I get those figures only because the 6,000 and the
13,000 are roughly 25 per cent of what the planning guidance figures
would have given. London was about 24,000 and the wider south
East was round about 39,000.

Mr Clive Betts

453. Could you produce a note for the Committee,
region by region, on what we should be achieving?
(Lord Rooker) Yes, based on what was in the planning
guidance we could. I would be happy to provide that. You have
to have a figure otherwise you cannot have a meaningful discussion.

454. It is a guideline.
(Lord Rooker) Yes.

Sir Paul Beresford

455. You have given us a brilliant definition
of "affordable housing". Another phrase is "key
workers". Can you give us a definition of "key workers"?
(Lord Rooker) Everyone is a key worker.

456. Exactly.
(Lord Rooker) I do not accept that there is any such
thing as an unskilled worker. I do not accept that as a moral
approach. On the other hand, in more general terms key workers
are taken to be workers in the health service, primarily in the
National Health Service, teachers, police officers and in some
respects those in the fire service and in social services. On
the other hand, one could argue that the Government does not necessarily
do that, but there is no such thing as a public sector nursing
home and yet nurses in nursing homes are as much key workers as
nurses in hospitals, but that does not come under the general
definition. The starter homes initiative, for example, goes a
bit wider than the public sector for stage one. Stage two is confined
to the public sector employees. It is horses for courses.

457. It depends where one stands. If one stands
in Sainsbury's the key worker may be the girl who works behind
cash desk.
(Lord Rooker) Or the person who stops your car being
stolen, or someone who comes into this building early in the day
to switch on the heating.

Mr Bill O'Brien

458. You and I have been around this place for
nigh on 20 years discussing housing. Today we are discussing some
issues that were discussed many years ago. I am concerned about
the approach that we have to regional imbalance. If we build more
homes in the South, surely we shall simply create a greater problem
for increasing inward migration as people from the North move
down to the South because the facilities are there. If we build
houses in the North, with communications, it will be easier for
people to travel to Doncaster, Wakefield or the Midlands, than
to somewhere in the South. Are we tackling it in the right way?
(Lord Rooker) It would be to everyone's advantage
if we had a more balanced regional economy in the country, so
that inward investment had its first port of call in the Midlands
and the North, rather than in the over-pressured South East. However,
some years ago we gave up trying to redirect industry. From my
own experience I know that industry was directed away from Birmingham
but later failed in many respects. It does not work that way.
There is the argument that if industry and development cannot
go where it wants it may not come here and it will go somewhere
else. At the moment there is pressure on the South East, simply
because of the geographical location in Europe. We need to improve
vastly the transport infrastructure, as we are on course to do,
and the serious work on river crossings with the Thames Gateway
programme, which is a national not a regional issue, will be as
vital for the North and the Midlands as it is for the South East.
The rail and traffic infrastructure will be phenomenally improved
for investment. In the mean time we have to deal with the situation
as we find it. Therefore, there is pressure in the South East.
It is not a matter of all of the South East. We have designated
four growth areas: the Stansted-Cambridge corridor, the Thames
Gateway, which was designated a long time ago by Michael Heseltine,
Ashford, where I made a brief visit on Monday, and the Milton
Keynes-south Midlands area. Those areas have been so designated
so that we can develop the growth in the South East in those areas
and stop it happening in an unplanned urban sprawl manner in the
rest of the South East. That is not to say that there will not
be any building, but we will have growth policies in growth areas,
so that we can grow communities and not just housing estates.
They have to be job led rather than just housing led. Therefore,
we can get a better balance and ease the pressure in particularly
the London area of the South East. There is not one policy that
you can operate on the basis that it will solve the problem simply
by saying, "Well, we will build in the North and put all
the jobs in the North". There is not the directional power,
and in the past it did not work.